(Article published in the Mar 31,2003 issue of TODAY, Business Section)
the Supreme Court and the Court of Appeals act quickly, the land mine
planted by Congress on Philippine shores in the wake of its retreat from
the threat of countermeasures from the Financial Action Task Force (FATF)
coalition, will explode on April 22. Over a billion pesos, or, to be more
precise, P1,036,433,634.17, previously determined by the Antimoney
Laundering Council (AMLC) to be probably related to an unlawful activity,
will be free to flow into the banking system and, like a chemical weapon
unleashed, contaminate our money supply. Victims of the predicate crimes
will be left holding an empty bag.
time bomb is in the Transitory Provision of the statute that recently
amended the Antimoney Laundering Law.
Section 12 of Republic Act 9194 in seeming innocence provides that
“existing freeze orders issued by the AMLC shall remain in force for a
period of thirty days (30) after the effectivity of this Act, unless
extended by the Court of Appeals”.
RA 9194 took effect on March 23 and pending before the judiciary on
that date were 30 freeze order cases, 28 in the Court of Appeals and two
in the Supreme Court.
I know the dedication and efficiency of the people manning the ramparts of
the AMLC and the state lawyers assisting them, the appropriate motions
have been filed by now to bring this matter to the attention of the
relevant courts. At the end
of the day, however, the ball will be in the Court of Appeals and we wait
with bated breath to see if the appellate justices will score for the
country or not. If they do, that will be a three pointer in the FATF’s
evaluation of how well the country’s concerned institutions are capable
of implementing the law. Otherwise,
their already dim view of the relevance of our judiciary in the fight
against dirty money will grow darker still.
the power of the AMLC acting on its own authority to freeze deposits and
similar accounts, found in Sections 6(6) and 10 of RA 9160 prior to its
amendment, was not a requirement of the FATF.
What the FATF wanted and still wants in any antimoney laundering
legislation is the ability at the administrative level of the government
to look into transactions for the purpose of determining whether or not
there are indications of money laundering.
Our bank secrecy laws, before RA 9194, prevented that. Hence, we had the dubious distinction of being in the
original list of non-cooperative countries and jurisdictions. We were among the founding members, as it were, found to have
grant of authority to the AMLC to freeze deposits for a limited period
without need of going to court was our way of testing the resolve of
FATF’s insistence on administrative access.
Thus, Sen. Ramon Magsaysay, Jr., during the Bicameral Conference
Committee meeting on September 28, 2001, on the eve of the deadline given
by the FATF for us to come up with adequate legislation, admitted as
is our [referring to the Senate] consolation to the FATF that although we
still have to go court to open an account but (sic) the asset or the
account is frozen for twenty [reduced in the law to 15] days to allow the
account holder to go and exhaust all administrative measures.”
FATF, as it turned out, was not at all consoled. And we have had anyway to give in to the FATF requirements
early this month. Otherwise,
we had to bear with the FATF’s recommendations of countermeasures to
the effectivity, however, of RA 9160 on October 17, 2001 until the
amendatory law takes effect, the AMLC’s freeze order was the single most
effective weapon against dirty money.
As of March 22, 457 freeze orders had been issued by the AMLC,
involving mostly money representing proceeds of swindling and scams.
an account and keeping it frozen was not a stroll in the park.
Section 10 of the law and Section 3 of Rule 3 of the Implementing
Rules require the finding by the AMLC of “probable cause” that the
account is in any way related to a predicate offense and/or money
laundering offense. This is
the same standard of certainty that is required of investigating fiscals
and prosecutors when deciding whether to file a case in court or not.
to the issuance of the freeze order is the sending of notice to the
account holder that his account has been frozen, telling him that he has
72 hours upon receipt to explain why the order should be lifted. The AMLC in turn had another 72 hours “to dispose of his
explanation”, i.e. to either maintain or lift the freeze order.
The freeze order self-destructs if the AMLC does not dispose of the
matter within that period.
freeze order, in any case, is good only for a maximum of 15 days (The
number “15” is the result of haggling in the conference committee, the
Senate version of the bill had an effective duration of 20 days; some
Congressmen wanted only 10. A
similar wet market approach was also taken in the fixing of the then
threshold amount in the original law of P4 million).
the AMLC wanted to have a longer freeze period, the order “may be
extended upon order of the court, provided that the 15 day period shall be
tolled pending the court’s decision to extend the period.”
By accident or design, the law did not state to which “court”
the AMLC should go and the two cases pending in the Supreme Court were
expected to clarify the issue. Congress,
however, pre-empted the Supreme Court and, in Section 7 of RA 1994,
clearly vested jurisdiction over freeze order on the Court of Appeals.
all that tedium, however, the AMLC had issued 51 freeze orders and, as of
March 22, were still in the process of investigating or evaluating 124
reports and letters of money laundering.
Then the rules of the game suddenly changed.
Because the FATF did not fall for the freeze order bait and
continued to insist on administrative access to deposits without a court
order, our legislators retracted the offering.
7 of RA 1994 amended Section 10 of R.A. No. 9190 and the AMLC found itself
without its power to freeze accounts without first going to court.
Instead, AMLC is now required, after it determines that probable
cause exists to believe that a monetary instrument or property is in any
way related to an unlawful activity as defined in Section 3(i) of the law,
to file an application with the Court of Appeals for the issuance of the
freeze order. The order is
good for 20 days (just like a temporary restraining order) unless extended
by the court.
the window go all the arguments so staunchly defended during the
deliberations of the Bicameral Conference Committee of the old law, by,
surprise!, the senators themselves, in favor of the freeze order (without
need of going to court) in the original law.
Listen, for instance, to Senator Pimentel: “The problem of
allowing the council to go to court before it issues the freeze order is
that the account order can very well disappear with this amount before the
court can issue a freeze order…the bird would have flown the coop before
action can be taken…”
token attempt was made in the amendatory law to avoid flight of the money.
The application by the AMLC for a freeze order is allowed to be ex
parte. That means the case may be filed and the freeze order may be
granted without notice to the accounting holder, thereby not tipping him
off that his account will be frozen.
on the comfort that an ex
parte proceeding gives, Senator Cayetano, had this to say when he
argued against the House version of the original law, in the
characteristic flair of his brilliant Taglish: “…First, why the Senate
version merely requires the council or the AMLU [now the AMLC] to freeze.
Because the idea is immediately to ensure the non-removal.
Okay, now, the House version would require a suit asking the court
to issue an ex parte order.. If I were the counsel of the money launderer,
I will guard all the courts. Lahat
ng husgado sa Metro Manila at maglalagay ako ng abogado dyan. Pag-file noong kaso ng AMLU for ex parte, will immediately
file an opposition para hindi ex
parte. So, you are not sure whether the court will issue ex
parte. Remember, you
are taking about a discretion by the court.
Because you cannot dictate on what the court will do.
Even if you ask (sic) an ex
parte petition, the court may say, “No. I would like the other
party to be given an opportunity to explain, hindi ba, why it sould not be
parte. By that time,
labas na ang bituka, hindi ba? So,
maimo-move nya. Mailalabas
nya na yung pera. So, that is
the very reason...kasi ganyan sa practice, eh.
I remember noong isang kaso ng rebellion kay Enrile, ginuwardiyahan
ko lahat yung mga clerk of court, eh.”
complete the retraction of the offering, our legislators not only
promulgated rules to govern freezing of accounts after the effectivity of
the amendments but also reached back to accounts that had been frozen
under the original law.
So much for all that argument against retroactivity that they
raised in protecting accounts opened prior to the anti-money laundering
Section 12 of RA 9194, as previously pointed out, limited the
lifetime of those freeze orders to thirty days from the effectivity of the
they imbedded an ambiguity to boot, wittingly or unwittingly designed to
The text of the Transitory Provision talks only of “existing
freeze orders issued by the
AMLC” that will remain in force for 30 days after the effectivity of the
Act, unless extended by the Court of Appeals.
It is silent on whether those orders issued by the AMLC which have
already been extended by the Court of Appeals prior to the effectivity of
the law will likewise lose their effectivity after the period of thirty
days unless re-extended by the Court of Appeals.